FHA and conventional are the two most common loan programs for homebuyers — and choosing between them can feel confusing. Here’s how they compare and how to figure out which is right for your situation.
Side-by-Side Comparison
| Feature | FHA | Conventional |
|---|---|---|
| Min. Down Payment | 3.5% | 3% |
| Min. Credit Score | 580 | 620 |
| Mortgage Insurance | Upfront + annual | PMI (until 20% equity) |
| Loan Limits (2025) | Varies by county | $806,500 (standard) |
| Best For | Lower credit, less down | Strong credit, 5%+ down |
| Property Standards | FHA appraisal required | Standard appraisal |
When FHA Makes More Sense
FHA loans are designed for borrowers with lower credit scores, smaller down payments, or limited credit history. If your score is below 680 and you have less than 10% down, FHA is often the better option. The mortgage insurance is higher, but the lower barrier to entry can make homeownership possible sooner.
When Conventional Makes More Sense
If your credit score is 720+ and you can put 5–20% down, conventional loans typically offer lower total costs because PMI can be removed once you reach 20% equity. FHA mortgage insurance, by contrast, often lasts the life of the loan.
The Real Answer
The “best” loan depends on your credit score, down payment amount, how long you plan to stay, and your monthly budget. I create side-by-side video comparisons for my clients showing exactly what each option costs — monthly, upfront, and over the life of the loan — so you can make the decision with confidence and clarity.